IIELPINU! Will you be
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THRIVE
II one of the thirty?
by lain Sherriff
THIRTY large groups will be running Britain's haulage in 10 years' time, according to Mr Ray Dillon, managing director of Renwicks Freight. Renwicks are one of Britain's six largest transport groups, and are themselves part of another large holding company, Renwick Group Ltd.
Renwicks Freight started to grow in 1972, and according to Mr Dillon its controlled growth pattern might well be copied by other aspiring group operators. His advice to all operators at the moment is to regroup and consolidate, irrespective of size. "There is a tendency to over-invest during a boom," he said, "and this is the time when loss-making or surplus to requirement equipment should be disposed of. Operators should be looking at how their assets are employed, and how best they can be diversified for maximum profitability."
He believes that a fleet of 70 vehicles could be cut to 50 and still handle the same traffic without loss of revenue. Smaller operators, in his opinion, could make proportional reductions. "Slimming down the business will make it much fitter to face recession," he says.
Renwicks Freight embraces 12 road haulage concerns and operates 600 vehicles from 24 depots between Bathgate in the North and Totnes in Devon. Its road transport activities include collection and delivery, express carriage, domestic and international trun.king, refrigerated transport and warehousing. The group's activities also include shipping and forwarding, contract hire and truck vehicle sales through its own DAF main dealership.
In 1972 Renwicks were engaged mainly in general haulage, coal transport and furniture removal, principally in Exeter, Totnes and Barnstaple. At that time the corn pany embarked on a five-year growth plan. The principle was to establish a network of transport depots and warehouses throughout Britain and gradually diversify into European traffic.
The planned growth took place with the acquisition of small domestic fleets and spread outwards from the South West, but in 1973 the five-year plan was overtaken by events. William Nuttall Transport Ltd, with 700 vehicles, came on the market. Renwicks acquired it and what should have been gradual and controlled expansion was
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accomplished overnight; the fleet size jumped from 100 to 800 vehicles and Renwicks found themselves in a liquidity situation much the same as many smaller operators are finding themselves in today. They had almost immediately to apply Mr Dillon's policy of rationalisation through regrouping and consolidation.
The main objectives of the group to acquire strategically placed depots with potential had been satisfied. The secondary objectives of acquir ing simultaneously good man agers and customers at a sensible price had likewise been managed. It is now a matter of history that the NiAtall balance sheet was not in good heart at the time of the acquisition, but the price had been right. What mattered was that there was potential in the company, and a poor trading situation could only be improved on.
Renwicks, with the financial support of the parent group, embarked on their rational isation programme. Where depots, traffic or functions were duplicated and could be merged, this was done. The duplication of effort and ex pense was eliminated. Build ings which had been vacated by either traffic departments or maintenance sections were turned over to warehousing; 10,000sq ft of warehousing in 1972 grew to 800,000sq ft today, not all of it, of course, by conversion.
During the regrouping period staff were either re-located within the road haulage com panies or offered alternative employment within the divi sion in some other function.
Although the fleet was reduced by 100 vehicles, the total ton nage carried remained con stant. This is surely an achievement in itself that a 121 per cent reduction in fleet size should maintain the revenue level.
Clear lesson
A clear lesson to be learned from Renwicks' experience is that there is much duplication and under-employment of resources among small operators. Complete duplication is taking place in many establishments separated by a few hundred yards, and clearly any group of operators in an area would save money by using common services for accounting, maintenance, purchasing and driving staff.
The suggestion of group working sends most operators running for cover. It has been tried in the past and often failed miserably, mainly because the participants have no trust in each other. The great fear is that their rates will be cut or their customers stolen, and their expenses and profits scrutinised by competitors. The Renwicks-type group has overcome these obstacles.
First of all each operator or depot in the group is separately accountable, and they are not in competition one with the other simply because they are all fulfilling different transport roles in their area.
Whereas attempts at group working in the past have been tried by operators all engaged on the same type of work, the Renwicks' experience clearly shows that operators with different forms of transport can group together and work successfully. Express carriers, furniture removers, longdistance and tipper operators benefit from those things which they have in common without losing either their identity or their traffic: while working as a group, if one section is going through a lean time of a temporary nature then it is being supported by those who are enjoying a period of plenty.
The board of the group is formed from the heads of each of the companies and each company makes its contribution to the costs of the parent company. The board meets under the chairmanship of the professional chairman. In dayto-day working there is no question of poaching traffic, cutting rates or stealing customers. In fact, in a traffic sense each company can book business for sister companies, retaining 10 per cent of the rate as a handling charge.
Savings to the member companies accrue from central purchasing of vehicles, tyres, fuel and lubricants. It is necessary to have only one stockholding of spares, and at today's interest charges this in itself must be attractive. Further savings result from central invoicing and secretarial services.
The essential difference, therefore, between Renwicks' initial three-company group in Devon and the generally accepted concept of group working, is that suspicion and jealousy have been removed because each is engaged on different work, and this seems a sound first step in the formation of a group.
Selecting the site
Having consolidated the first group, the next step, and Renwicks took it when they acquired Nuttalls, is to superimpose the group structure in another part of the country. Selection of the location is important, and ideally it should be in an area to which the long-distance company or the express carrier is running and from which they can be backloaded. An early result should be the elimination of empty backrunning by sister companies in both locations with a subsequent reduction in operating costs and fuel saving. It also follows that, as traffic grows, the two units in